Cash management can be complicated and difficult for a small business, especially during times of crisis. As consumers and businesses face challenges, the need for flexibility is as great as ever, and businesses should look to be as accommodating as possible with respect to payments. At the same time, businesses need flexibility in managing their cash.
Cash flow was already a primary concern among small businesses before the coronavirus pandemic. These concerns can be overwhelming for any business simply trying to stay afloat, let alone trying to increase transfers and deposits. Bill payments and money transfers can be time-consuming. Invoicing can also be inconvenient, so make sure to explore what your bank offers to make this easier for you. You can manage your money without leaving your office, while reducing paperwork, but having the right cash and treasury management tools and resources is paramount.
For starters, you should be using business accounts that are separate from your personal accounts. Use a business checking account that you can regularly deposit money into and withdraw from to pay expenses. This is where the majority of your cash flow should ebb and flow. Set up a business savings account to use as an emergency fund, and contribute to it as much as possible. This way, you can tap into it if you run into major cash flow issues. A business credit card is also a good idea and offers extra peace of mind as well as potential rewards.
Keeping your business finances separate from your personal finances is imperative to cash management, and will prevent you from making potentially catastrophic mistakes to either your personal wealth or the health of your business.
Collections and Receivables
With Automated Clearing House (ACH) origination, you can initiate electronic transactions through the National Automated Clearing House Association (NACHA) network and collect ACH payments from customer accounts, improving cash flow automatically. This can also help with cash flow forecasting.
"While the national emergency has altered much of how we live, there are two things that remain unchanged: The ACH Network continues to function normally, and NACHA remains nimble," said NACHA President and CEO Jane Larimer in relation to how the organization has fared during the COVID-19 crisis. ¹
Jane Larimer (Image via PR Newswire)
In other words, ACH origination is still a viable service that you can take advantage of.
Make use of remote deposit capture, which allows you to deposit checks into your account using your phone or PC. Checks can clear on the same or next business day. This makes deposits extraordinarily convenient, and eliminates otherwise necessary trips to the bank.
Merchant account services can help you increase sales by allowing you to accept major credit cards securely, while also giving you insights into your customers, helping with marketing and promotions.
Online invoice banking can enable you to accept credit cards online and over the phone and send emails with click-to-pay invoices. This is also useful for accelerating cash flow.
With ACH disbursements, you can deposit money in your own accounts as well as those of employees and vendors while reducing administrative costs, interest, and late fees. You can also outsource disbursement so that your payables are consolidated. Check, ACH and credit card payments can be automated via one file.
To offer additional flexibility to employees, you may consider offering a payroll card as an option. This will appeal to those without traditional banking services, and will give them a way to access funds at ATMs, as well as online.
A corporate foreign exchange service can give you multiple ways to make international payments, including foreign wire transfers and use of foreign drafts while giving you access to foreign currency accounts.
Consider using capital management tools like sweep accounts, which will automatically withdraw excess funds from your checking account to directly pay down loan balances on a nightly basis. This will help you control debt, reduce loan payment amounts, and eliminate overdrafts. Similarly, an investment sweep will move excess funds to overnight investments, which can earn interest.
Treasury Internet Banking
Ask your bank about Treasury Internet Banking, which you can use to view your financial data, banking information, payment solutions, and specialized reports from your computer or mobile device any time of day. This will help you track important financial data and stay on top of your cash management. You can use this to generate any number of custom reports that will help you manage your business finances more effectively.
Mismanagement of cash is a recipe for business failure, and you have enough challenges to deal with during this pandemic. Talk to your bank to get started using the cash management solutions that are right for you.